CEMEX(US:CX)2024-02-08 20:11Financial Data and Key Metrics Changes - Full year net sales increased by 8%, while EBITDA grew by 20%, reaching a record $3.35 billion, with EBITDA margin expanding by 2 percentage points [4][15] - Free cash flow after maintenance CapEx was $1.2 billion, growing by $655 million due to higher EBITDA and improved working capital management [8][48] - The leverage ratio declined by 0.8x to 2.06x, within investment-grade credit parameters, with a return on capital expanding by 1.5 percentage points to close to 14% [8][51] Business Line Data and Key Metrics Changes - Growth investments accounted for 10% of total EBITDA and 13% of incremental EBITDA, with Urbanization Solutions growing at a CAGR of 24% since 2019 [5][21] - In Mexico, both sales and EBITDA grew in the mid-teen percentage area, driven by strong formal sector demand [28] - The U.S. posted record full year EBITDA of over $1 billion, with a 37% increase despite lower volumes, driven by pricing strategy and growth investments [32] Market Data and Key Metrics Changes - Volume declines were noted in several markets, particularly in the U.S. due to weather and lower demand, while Mexico reported positive volumes [9][32] - EMEA experienced a 7% increase in full year EBITDA, with a 0.3 percentage point expansion in EBITDA margin despite a slowdown in construction activity [36] - South Central America and the Caribbean saw a rebound in sales and EBITDA, with cement prices increasing by 9% [40][42] Company Strategy and Development Direction - The company aims to focus on deleveraging and accelerating its bolt-on growth strategy while proposing a sustainable shareholder return program [3][24] - The Urbanization Solutions business is aligned with global construction trends, including decarbonization and circularity, presenting significant growth prospects [12][21] - The company plans to initiate a sustainable dividend program, proposing a 2024 dividend of $120 million, reflecting confidence in operating performance and free cash flow generation [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2024, particularly in Mexico and the U.S., expecting EBITDA growth between low to mid-single digits [54] - The company anticipates continued deceleration in cost inflation and aims to maintain and increase margins [54][56] - Management highlighted the importance of monitoring election dynamics in both Mexico and the U.S. as potential influences on demand [62][66] Other Important Information - The company achieved a 4% decline in Scope 1 emissions in 2023, reflecting progress in its decarbonization efforts [10][16] - The company was recognized by CDP on its A List for climate change disclosure, indicating strong transparency in environmental impact [4][11] Q&A Session All Questions and Answers Question: Outlook for volume expectations in Mexico and the U.S. - Management noted that while there are risks, strong demand from nearshoring and ongoing projects in Mexico support a positive outlook for volumes [62][64] Question: Pricing strategy for 2024 - The company plans to adjust pricing strategies based on inflation recovery, with potential for multiple price increases if necessary [76][78] Question: Strategic CapEx allocation and timing - Management confirmed that strategic CapEx is well-defined and projects are expected to be executed evenly throughout the year, focusing on climate action and aggregate replenishment [82][86] Question: Dividend policy evolution - The company aims to allocate about 10% of operating free cash flow to dividends, with expectations for growth as business performance improves [97][98] Question: Urbanization Solutions business and geographic breakdown - Management confirmed that the Urbanization Solutions business is significant, with expectations for more disclosure as it grows [116]